On January 3, 2012, the City of Philadelphia’s new lobbying ordinance went into effect. A close cousin to the statewide Pennsylvania lobbying law, the Philadelphia ordinance (found at City Code §§20-1201 to 1210, and implemented by Board of Ethics Regulation No. 9) requires those that lobby the city and its agencies to register with the Philadelphia Board of Ethics and thereafter file, at quarterly intervals, reports disclosing the details of their lobbying costs and activities. Many individuals and organizations are now faced with the task of determining if they and their lobbyists must register and begin to track relevant expenses and activities for those regular reports. Every situation will be different, as the detailed ordinance and its associated regulations do not apply in a one-size-fits-all fashion to every client and lobbyist. While it is not possible to discuss every aspect of the new law in this space, it is hoped that this article will provide at least a helpful introduction and overview of some of the key concepts and issues at play.
Does The Ordinance Apply To My Situation?
In every case, the first question is whether lobbying, as defined by the ordinance, has taken place or is contemplated. The ordinance defines “lobbying” as “an effort to influence legislative action or administrative action.” The terms “legislative action” and “administrative action,” in turn, are broadly defined such that the ordinance could be deemed to apply to the vast majority of city activities. Since the general lobbying definition cuts such a wide swath, it may be easier to examine the ordinance through the lens of its many exemptions.
There are 15 different exemptions in the ordinance that, by their terms, remove certain activities from the lobbying equation. Members of the business community will be pleased to learn that certain activities undertaken in responding to publicly advertised RFPs are not considered lobbying activities. Nor are services performed under an existing contract with the city considered lobbying. Communications with city agencies on routine matters of a ministerial nature (scheduling, requesting forms, etc.) also are not considered lobbying activities.
Among its exemptions, the ordinance also contains important baseline thresholds that apply across the board to all principals (the party for which the lobbying is conducted) and lobbyists. One purpose of those thresholds is to eliminate from consideration relatively inconsequential lobbying activity. For example, if a principal’s own employee lobbies on behalf of the principal, that activity is exempted until that employee’s time spent on such activities reaches 20 hours in any quarterly reporting period. Another numerical threshold is monetary: If a lobbyist is compensated $2,500 or less per quarter by all principals, then that lobbyist is exempted. Similarly, if a principal spends $2,500 or less on lobbying expenses in any given quarter, then that principal is not required to file a quarterly report (but may have to register).
What Do I have To Do To Comply With The Ordinance?
The nuts and bolts of compliance revolve mostly around two key submissions: The initial registration and the quarterly expense report. The registration forms are submitted by each principal and lobbyist, and therein those parties supply basic information to the Board of Ethics. That registration, and an accompanying annual fee, must be submitted within 10 days after engaging in lobbying activity (subject to the exemptions of the ordinance, some of which are discussed above).
Following registration, the lobbyist and principal must begin tracking lobbying time, communication and expense data for inclusion in quarterly expense reports, which will be due 30 days after the end of each reporting period. A reporting period is a calendar quarter, which means that reports are due each year in late April, July, October and then in January of the next year. Ultimate responsibility for preparing the reports lies with the principal, but the lobbyist will be required to sign off on them. Those quarterly reports must include information about lobbying expenses, including costs associated with lobbyist compensation, as well as costs for gifts, hospitality, transportation and lodging furnished to city officials or employees or their families. (It also should be noted that a separate notification must be furnished to the city officials or employees before the report is submitted, stating that the report will contain information about what was provided to those individuals.) The report also must disclose details of direct and indirect lobbying communications.
According to the ordinance, the compliance process is to be implemented via an electronic registration and reporting system. The information submitted through that system will be made available to the public in some form. However, due to budget, time and other constraints, the Board of Ethics has not yet been able to roll out the electronic system. As a work-around, the board has issued temporary paper registration and reporting forms that will be used in place of electronic registration and reporting.
What Are The Penalties For Noncompliance?
The lobbying ordinance provides for civil penalties for noncompliance of up to $2,000. Failing to register or report carries a civil penalty of up to $250 per day, up to a total of $2,000. In addition, should the board find that the ordinance was violated intentionally, a lobbyist may be forbidden to engage in city lobbying for up to five years. The ordinance also contains restrictions on contingent compensation of lobbyists, lobbyists’ participation in political committees and conflicts of interest, as well as other restrictions and prohibitions.
What Steps Should I Be Taking Right Now?
The substance of the ordinance and its implementing requirements underscore that principals and lobbyists immediately should have both an internal dialogue and a client-lobbyist dialogue (if the principal has an outside lobbyist) to ensure compliance with the ordinance. Since lobbyists are often engaged to advocate for clients on numerous governmental fronts, it is important for all parties to have a clear understanding of what costs are associated with Philadelphia lobbying activities as opposed to lobbying of other entities. It may be wise to consult with counsel to determine if registration and reporting should be undertaken. If it is determined that the principal and lobbyist should register and report, the registration form should be submitted promptly and steps should be taken to establish a protocol to track details and the backup documentation for all lobbying time, expenses and activities. In all cases, principals and lobbyists immediately should commence best efforts to comply with the spirit and letter of the ordinance and its implementing regulations.
Published June 22, 2012.
